BoE interest rate cuts ‘likely’ to prompt overseas investment

The increasing hints that the Bank of England (BoE) could cut interest rates is likely to prompt investors into overseas financial assets, according to the CEO of one of the world’s largest independent financial services and advisory organisations.

Chief executive and founder of deVere Group, Nigel Green, spoke out as the pound came under pressure following a key member of the BoE’s Monetary Policy Committee indicating he’d be willing to set a looser policy.

Green, who suggested the BoE appeared ‘confused’ about which risk to fear most, commented: “This is the third senior BoE official within a week who has hinted that a rate cut could be imminent.

“In direct response, the pound has come under pressure, as you would expect when relative interest rate expectations change, and it has surrendered its $1.30 level.

“Is it a recession and deflation, caused by a no-deal Brexit at the end of this year and decreasing corporate investment over the last few years?

“Or is it an overheating economy and inflation caused by a wave of relief if an EU trade agreement is signed that offers minimal disruption to business, combined with a splurge of government borrowing to pay for the Prime Minister’s increased spending plans.”

The next policy decision from UK’s central bank is due on 30 January, although 24 January is also expected to be a critical day due to the release of key PMI surveys.

The deVere CEO added: “The BoE still hasn’t made up its mind what direction the next move in rates will be. But markets are already pricing, in an increased chance it will be a cut.

“As such, we can expect more sterling turbulence, and as a result, we are likely to see investors increasing their exposure to overseas financial assets, including global equity funds.”

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